QUESTION 5 For a discount bond, price converges to the face value at maturity. What is the reason? A. Price must fall to compensate for coupon being higher than the market interest rate O B. Price must rise to compensate for coupon being lower than the market interest rate C. The reinvestment rate is too low D. At maturity, the price must be higher than the face value to compensate for coupon higher than the market interest rate QUESTION 6 You just won the Powerball lottery that pays after-tax $30,000 per year beginning immediately for the next 20 years. The lottery commission makes you an alternative offer to accept a lump sum of $400,000 today to settle the winning. Assume that the reinvestment rate is 4% per annum. Which of the following statements is correct? . Accept the offer because you are making $24,018.18 more than investing the annual payments B. Reject the offer because you could make $24,018.18 more by investing the annual payments. OC. Accept the offer because you are making $7,709.79 more than investing the annual payments D. Reject the offer because you could make $7,709.79 more by investing the annual payments